Financial Times: Shell aims to shed arrogant reputation

By Ian Bickerton in Amsterdam
May 28, 2004

Royal Dutch/Shell will try to shed its reputation for arrogance and bullying and re-examine executive pay as it battles back from a crisis that saw it cut reserves and oust top managers, its managing chairman has vowed.

Jeroen van der Veer told staff in Houston, Texas, this week that he would not tolerate "bullying" within the company, and admitted that its dealings with business partners had often been "arrogant".

Mr van der Veer, who heads the company's management committee, said he would "take a hard look" at a system of senior executive remuneration, linking performance to results, according to a person close to the company.

"He questioned whether, although people are better paid, that is actually delivering the improvements for which they are being compensated," the person said.

The comments came during a keynote speech at a gathering of Royal Dutch/Shell's 400 senior managers, and earned a standing ovation for Mr van der Veer, who was appointed in March following the resignation of Sir Philip Watts in the wake of the oil and gas reserves debacle.

"No one can remember an event like this," said the person close to the company. "It was a watershed for Shell.

"It was extremely open and emotional, with people at ease and able to criticise. There was a lot of soul-searching. To be able to talk in that way is something that has never happened before."

Mr van der Veer is expected to underscore the necessity for a fundamental cultural shift at Royal Dutch/Shell in his foreword to its delayed 2003 annual report, published today.

The document will contain a detailed breakdown of reserves policy - the issue that led to the departure of Sir Philip and Walter van der Vijver, the head of exploration and production - but is unlikely to deliver fresh shocks.

Mr van der Veer's Houston speech, where he appeared on stage flanked by management committee colleagues, was dominated by the issue of restoring trust.

"Van der Veer acknowledged that the reserves issue has made people realise that the company is perceived as arrogant and there has been a bullying culture within Shell," the person said.

Mr van der Veer said that in dealings with business partners it was often "unwilling to accept the blame" for projects that faced enormous over-runs (in terms of time) "or even to concede that there were over-runs", the person said.

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